The Importance of Information System in Business

The Importance of Proper Record Keeping for Henry’s Hardware

The owners of Henry’s hardware, Henry and Cathleen, are running the small family business without any proper record keeping. Although the daily activities of the business might be smooth, I feel they may not realize the long-term effects of their actions since proper record management is the basis for the success of a company.

Lack of Formal Information Base and its Effects

First, lack of formal information base may affect their business. The owners of the organization may be unable to manage their business accounts, tax information and working costs effectively. The financial impact of this issues with taxation and budgeting. Legally, failure to keep records, in case of an audit or legal action against the business, can lead retention. Regarding business productivity, pondering mentally on the next course of action consumes more time than referring to records.

The Role of Information System in Business Management

Information System can help Henry and Cathleen to manage their business well. It aids successful operations by monitoring stock availability to customers. Again, it creates intimacy between the business, its suppliers and customers through observation of the stock turnover. Checking the information system enables the business owners to make decisions without looking for information elsewhere. They are also able to get competitive advantage whenever they will achieve any of the above advantages. Information System captures elaborate data based on the daily activities of the business. Such activities include business transactions regarding cash transactions over the counter, bank deposits and withdrawals as well records of debts and credits. It records on the rate of stock turnover as well.

The Benefits of Having an Information System

In conclusion, having an information system is vital for deciding on the stock to purchase based on customer taste. Records of profits can easily help in making decisions on further investments. Information on competitors is available at fingertips. Good Information System is a source of the decision on the cost-effective way of running the business by keeping track of bills and tax payments.